December 20, 2006

Epstein on Seton Hall's "ethics"

It all started a couple of weeks ago when Richard A. Epstein wrote the op-ed discussed in this post in which he decries the deferred prosecution racquet that coerced Bristol Myers into making a "contribution" to fund an ethics endowment at the prosecutor's law school, Seton Hall.

Professor Epstein's piece prompted a response from Seton Hall Law Dean Patrick Hobbs, who contends essentially that the ethics program is for such a good purpose that the school can overlook the serious breach of ethics that was involved in funding the program in the first place.

My Nov. 28 editorial-page commentary "The Deferred Prosecution Racket" brought forth a spirited but wholly unconvincing response by Patrick E. Hobbs, dean of the Seton Hall Law School ("Fighting the Infection of Unethical Behavior in Corporate Culture," Letters to the Editor, Dec. 8). Dean Hobbs defends his law school's decision to accept money for a business ethics program pursuant to the deferred prosecution agreement between the U.S. Attorney for New Jersey, Christopher J. Christie, and Bristol-Myers Squibb. It is sheer naivet� to assume that BMS and its attorneys signed on, as Dean Hobbs suggests, because of their deep belief that "the wrong corporate culture can become a breeding ground for unethical and criminal behavior." There's no way that BMS would have made that donation if freed from the risk of corporate prosecution. To avoid the taint, let Dean Hobbs raise money for a worthy project from one of thousands of New Jersey firms not faced with the threat of federal indictment.

If anything, his defense of the BMS-Seton Hall gift shows just how cancerous DPAs can be. Any good course in business ethics would stress the dangerous institutional incentives put in play if DPAs can direct payments to public charities. Let's posit that Seton Hall did nothing whatsoever to urge Mr. Christie to funnel money to it through the DPA. No matter: Once this precedent is set, it's open season for every public institution to lobby prosecutors for a piece of the action. Worse still, nothing prevents these organizations from quietly supporting criminal investigations to increase the likelihood of such windfalls. The public should not tolerate any arrangements that introduce these third-party influences into the prosecutor's office. Any excellence of Mr. Christie as a prosecutor or of Seton Hall in ethics reform are tainted by this gift, which the law school should return forthwith.

The systemic problems with DPAs, unfortunately, cannot be solved by Timothy Coleman's proposal (Letter, Dec. 8) to incorporate the various mitigating elements of DPA into the underlying criminal case. That approach will only clog criminal trials with matters wholly irrelevant to guilt or innocence. And it will fail to soften the present dire consequences from the threat of prosecution. Similarly, it is unwise (and futile) to seek congressional legislation to eliminate the harsh collateral consequences of a federal indictment in other federal agencies. Even if enacted, that legislation would not keep state regulators from pulling their licenses. The downward spiral of DPAs must be stopped at its source, by insulating corporations (but not their senior officers) from criminal prosecution. The recent McNulty memorandum doesn't shred the Thompson memorandum. But at least it is a start.